Doing business beyond borders

Most people seem to see the Asean Economic Community (AEC) as something that our country is not ready for, and will bring us great problems. The fact is, we are already more Asean-engaged than most people appear to think, and many Philippine businesses of various sizes are already reaping the benefits of doing business with our Asean neighbors. It seems to me that the first hurdle we need to overcome is the self-defeating mindset that “we are not competitive enough,” “we are not prepared,” or “government has not done anything to prepare us for the AEC.”

An interesting new Department of Trade and Industry publication, called “Business Beyond Borders,” features the stories of 20 Filipino firms—including large and small, and familiar and obscure ones—that have already been cashing in on the opportunities presented by the AEC. Their stories ought to convince readers that we have long been ready and well-positioned to benefit from the closer regional economic integration that the AEC represents. Of 10 lessons gleaned by the publication from the featured stories, I’d like to particularly highlight three:

First,  there  is  growth  in  Asean.  Those who had chosen to take an aggressive rather than defensive stance toward the much wider Asean market have moved ahead and demonstrated much greater scope for business growth than would be possible otherwise. Indeed, why be content with targeting 100 million Filipino consumers when the Southeast Asian market is six times larger at more than 600-million strong? Well-known fast-food chain Jollibee began reaching beyond our shores in 1987, when it opened operations in Brunei; now it is Asia’s second largest quick-service restaurant chain. Aside from more than 2,000 local branches, it now has 50 stores in Vietnam, 12 in Brunei, two each in Singapore and Cambodia, and 402 in China with which Asean as a group had forged a free trade agreement (FTA) in 2010.

It is important to point out that Asean has collectively entered into bilateral FTAs with six major economies (“dialogue partners”), namely, China, Japan, South Korea, India, Australia and New Zealand. This has further opened preferential access to an even larger market of 3.5 billion consumers for our businesses, and Jollibee has been using this to good advantage.

So is Liwayway Marketing Corp., maker of the popular Oishi snack food products. Apart from its four manufacturing plants in the Philippines, Liwayway now also has four in Vietnam and one each in Burma (Myanmar), Thailand, Indonesia and Cambodia. It has an even longer-standing factory network in China, where the company began operations more than 20 years ago in Shanghai. From China, Liwayway exports its products even farther overseas to the United Kingdom.

Second, smaller businesses and social enterprises have as much to gain from the AEC. In 2012, a small company called Manila Catering made a presentation to CEO Tony Fernandes of the Malaysian AirAsia Group to provide in-flight catering services and bagged the deal. I’ve heard the company’s owner speak of how her Malaysian partner shared good practices with her on the layout and process flow of her commissary kitchen, which greatly improved productivity and cost efficiency. Today, the company provides in-flight hot meals for three airline companies serving Asean destinations from the Philippines. It has also become one of the few halal-certified food providers in the Philippines, an important edge in serving the predominantly Islamic Asean market.

Social enterprises Human Nature and GREAT Women have likewise made successful inroads into Asean markets. Human Nature manufactures beauty and personal care products from local
organic ingredients. It started out in 2008, selling its products through online platforms. Its products are now distributed through major retailers, 30 franchisees, and 40,000 dealers, and are exported to Singapore, Malaysia and soon, Indonesia. GREAT Women (for Gender Responsive Economic Action for the Transformation of Women) helps women-microentrepreneurs from all over the country produce quality handicrafts such as bags and fashion accessories, as well as food products. Their products received Asean exposure during a Global Women’s Summit in Malaysia last year, and partnerships are being developed with Malaysia, Burma and Vietnam both to promote wider reach and expand the benefits to more Asean women.

Third, contrary to perceptions expressed by some critics,  various  government  programs  are  actually  in  place  to  enable  small  and  medium  enterprises  (SMEs)  to  engage  and  benefit  from  the  AEC.  The national AEC Game Plan spells out various agencies’ SME-oriented programs and initiatives, many of which have been around for years. A number of firms already actively doing business in other Asean countries attest to having been helped by programs of the DTI such as skills training, shared service facilities and Doing Business in Free Trade Areas seminars, among others. Beneficiaries have ranged from the Tubigon Loomweavers Multipurpose Cooperative in Bohol, producing homegrown textile products, to Nito Seiki, an original equipment manufacturer of auto and aerospace parts and components. In interactions with many small exporting firms around the country, I have heard numerous accounts of how the DTI’s and other government initiatives helped provide the boost that got them into the export markets.

It takes shedding the common inward-looking, defensive posture of many of our firms, in favor of an aggressive outward-looking one, to realize that many of us are creating ghosts where we could otherwise be finding “gold mines.”

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